In Rosano v. Freedom Boat Corp., a boat owner brought suit against a marina and its insurer, American Modern Insurance Group, Inc. (“American Modern”), for damages to the boat he leased to the marina. The owner brought causes of action for breach of contract and failure to pay a claim against American Modern, claiming that he was an insured under the policy issued to the marina. After reviewing the policy language, the United States District Court for the Eastern District of New York held that the owner was not named as an insured or additional insured and entered summary judgment in favor of American Modern.
The policy at issue in this case listed the marina as the named insured on the Declarations Page. It also contained an Additional Insured provision that extended coverage to people or organizations identified on the Declarations page as Additional Insureds. It was undisputed that the owner was not listed as a named insured or an additional insured on the Declarations Page.
Examining well-established New York law, the court determined that only the policy owner has standing to sue the insurer under the insurance policy. Under New York law, a non-party to a contract lacks standing absent evidence of an intent in the contract to permit enforcement by a third party. Since the owner was not a named as an insured or additional insured, and the policy did not indicate an intent to confer a benefit on the owner, the court held that the owner had no standing to allege a breach of contract claim against American Modern.
With respect to the owner’s claim against American Modern for failure to pay a claim, the court noted that the owner’s Complaint alleged bad faith and sought punitive damages under that cause of action. As New York law requires the existence of a valid contract to support a cause of action for bad faith, the court held that American Modern was entitled to summary judgment because there was no contract between the owner and the insurer.
Moreover, the court also noted that New York law requires the allegation of an independent tort in order to obtain extra-contractual damages. Since the owner’s claim was predicated solely on the bad faith denial of coverage, the court held that it also failed on that basis.